CBSL cuts capital requirement for money transfer firms

The Central Bank of Sri Lanka (CBSL) will reduce the capital requirement for local money transfer service providers from Rs 20 million to Rs 15 million to encourage formal registration, CBSL Payments and Settlements Department Director Vasantha Alwis stated during a Committee on Public Finance (COPF) meeting last week.

The adjustment aims to bring informal networks into the regulated financial system, particularly targeting hawala and Undiyal operators. Referring to the Money or Value Transfer Service Providers Regulations No. 1 of 2025, which awaits parliamentary presentation, Alwis explained that the updated rules lower the capital threshold for operators within the country while also addressing foreign-registered entities.

The previous framework, established under the 2024 regulations, applied only to businesses registered and operating inside Sri Lanka. However, officials noticed that multiple overseas-registered money transfer services continued to operate locally via agents and intermediaries, bypassing direct regulatory oversight. The newly introduced regulations, published via Extraordinary Gazette No. 2468/06 in late December 2025, explicitly permit foreign operators to register if they meet CBSL requirements.

When asked about local registrations under the initial 2024 framework, Alwis revealed that no businesses registered, suggesting the high capital requirement acted as a barrier. He noted that the Rs 5 million reduction followed direct feedback from the industry. Although local uptake remained low, the central bank received applications from three foreign-registered money transfer providers by the 31 March 2026 compliance deadline.